Legal Definitions - face-amount certificate of the installment type

A face-amount certificate of the installment type is a type of investment contract or security that represents an obligation by its issuer to pay a stated or determinable sum at a fixed or determinable date or dates more than 24 months after the date of issuance. The payment is made in consideration of the payment of periodic installments of a stated or determinable amount.

For example, if an investor purchases a face-amount certificate of the installment type for $10,000, the issuer may agree to pay the investor $15,000 in five years, with the investor making periodic payments of $200 per month until the maturity date.

Another type of face-amount certificate is a fully paid face-amount certificate, which represents a similar obligation on the part of the issuer, but the consideration for which is the payment of a single lump sum.

Periodic-payment-plan certificates are also similar to face-amount certificates of the installment type. They provide for a series of periodic payments by the holder and represent an undivided interest in certain specified securities or in a unit or fund of securities purchased wholly or partly with the proceeds of those payments.

Overall, face-amount certificates of the installment type are a way for investors to make periodic payments and receive a fixed return on their investment at a later date.